Agreement Corporation

DEFINITION of 'Agreement Corporation'

A type of bank chartered by a state to engage in international banking. The bank "agrees" with the Federal Reserve Board (FRB) to limit its activities to those allowed an Edge Act corporation.

BREAKING DOWN 'Agreement Corporation'

In 1916, Congress passed the Agreement Corporation Act, which gave national banks the right to invest a portion of their capital and surplus in state-chartered banks and corporations that would conduct international business. The state-chartered bank had to enter into an agreement with the FRB to be bound by its rules and regulations.

The Agreement Corporation Act produced little activity, so in 1919 Congress passed the Edge Act that authorized the FRB to charter corporations to engage in international banking. Both laws have undergone many changes since passage, and many of their restrictions have been relaxed.

RELATED TERMS
  1. Edge Act Corporation

    A banking institution with a special charter from the U.S. Federal ...
  2. Corporate Charter

    A written document filed with a U.S. state by the founders of ...
  3. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
  4. State Bank

    A financial institution that has been chartered by a state to ...
  5. Charter

    A legal document that provides for the creation of a corporate ...
  6. Regulation K

    One of the regulations set forth by the Federal Reserve. Regulation ...
Related Articles
  1. Markets

    2 Catalysts for Fed Hikes That Aren't Data Driven

    Find out what catalysts that are not data-driven are likely to influence the Federal Reserve Board's rate hike decisions for the remainder of 2016.
  2. Markets

    The Banking System: Commercial Banking - How Banks Are Regulated

    ByStephen D. Simpson, CFA The 2007-2008 mortgage bubble in the United States, and worldwide credit crisis, highlighted why banks are so heavily regulated; with such a key role in the economy, ...
  3. Investing

    The Banking System: Federal Reserve System

    ByStephen D. Simpson, CFA The central bank of the United States is the Federal Reserve System. The Federal Reserve System came into being in 1913, after the passage of the Federal Reserve Act ...
  4. Managing Wealth

    Retail Banking Vs. Corporate Banking

    Retail banking is the visible face of banking to the general public. Corporate banking, also known as business banking, refers to the aspect of banking that deals with corporate customers.
  5. Markets

    The Federal Reserve: Duties

    The Fed's mandate is "to promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long-term interest rates."In ...
  6. Investing

    What's a Correspondent Bank?

    A correspondent bank is a bank that acts on behalf of another bank, usually a foreign bank.
  7. Markets

    Regional Banks Give The Fed A National Perspective

    We all know that the Federal Reserve utilizes monetary policy to control the economy, but what do the 12 regional Federal Reserve Banks do?
  8. Markets

    How Will Bank Regulation Affect British Banks?

    We look at the proposed changes to Britain's banking system, and see whether it will be able to stay competitive.
  9. Markets

    Introduction To The Chinese Banking System

    As China steps into a greater role in the global economic system, their banking system continues to evolve.
  10. Markets

    5 Of 8 Big Banks 'Failed' By U.S. Regulators (MS, WFC)

    Banks must submit a living will, describing the company's strategy for orderly resolution under bankruptcy in the event of material financial distress
RELATED FAQS
  1. How are investment banks regulated in the United States?

    Read about the extensive regulations placed on investment banks in the United States, beginning with the Glass-Steagall Act ... Read Answer >>
  2. How was Glass-Steagall weakened prior to its repeal?

    Learn about the gradual relaxation of the strict banking regulations under Glass-Steagall, eventually culminating in the ... Read Answer >>
  3. What agencies were created by the Glass-Steagall Act?

    Learn about the Glass-Steagall Act of 1933 that significantly reformed the banking industry, and specifically, what government ... Read Answer >>
  4. How do changes in capital stock illustrate the overall health of a company?

    Understand what capital stock is comprised of. Learn how changes in capital stock illustrate and provide insight into the ... Read Answer >>
  5. How does the Wall Street Journal prime rate forecast work?

    Learn about the Wall Street Journal's prime interest rate methodology. Discover trailing financial indicators, and engage ... Read Answer >>
  6. What were the objectives of the Glass-Steagall Act?

    Learn about the original objectives of the1933 legislation known as the Glass-Steagall Act and how it affected the banking ... Read Answer >>
Hot Definitions
  1. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  2. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  3. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  4. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  5. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  6. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
Trading Center